Collecting rent is a vital part of running a successful property management business. Rent collection apps give landlords and property managers an easy way to keep healthy cash flow. But deciding on the best online rent payment service is challenging. Some online payment systems can cost hundreds of dollars a month to use. Other mobile payment apps are free to use, but not ideal for rent collection.
How can you choose a suitable online rent payment service that won’t cost you a dime? Does using a free rent collection app mean that you have to compromise on services? This article aims to answer your questions about using property management apps for free.
What is Online Rent Collection?
Online apps for rent collection allow tenants to pay monthly rent using a credit card, debit card, or ACH direct deposit. In some cases, property managers can also accept other online payments, such as PayPal or Venmo.
Online rent collection gets rid of using old-fashioned methods of collecting rent. These methods of collection rental payments are time-consuming, unsafe, and often result in late payments.
For example, what is the traditional rent collection method? You have to wait for a rent check to arrive in the mail. Then you need to drive to the bank to deposit it in your bank account. After that, you have to wait for the funds to clear in your bank account. In some cases, the rent check bounces, and you need to have an unpleasant conversation with your tenant.
Think about it—from the time your tenants mail the check until it clears in your bank account could take up to a week.
The Benefits of Collecting Rent Online
The primary benefit of using an online rent payment service is speed. Rental payments show up almost instantly in your bank account. If you use a free rent collection app or a paid-for app, you can effortlessly track all your tenants' online rent payments.
Usually, even the most basic rent collection apps accept online payments with tracking options. Because many of these property management apps are free, you shouldn't have to pay any money to collect rent online.
Improving your cash flow situation is one advantage of getting your tenants to pay online. What are the other benefits of switching to accepting mobile payments? Here are five additional benefits:
- Save landlords money: Using a free rent collection app saves you money on property management costs. For example, you spend less time and resources processing rent checks and payments—a definite advantage for rental property owners.
- Improve customer service: Because you have more time, you can put more effort into building excellent landlord-tenant relationships. This will help improve the reputation of your property management company.
- Minimize late rent payments: Free apps to collect rent payments from tenants make paying rent effortless. Paying by credit card, direct money transfer, eChecks, or other online methods mean you have to deal with fewer missed payments. Tenants also are happy because they avoid paying late fees.
- Enhance security: Accepting rent payments online removes risks associated with paper checks or cash payments. You don’t have to keep cash on-site, reveal bank details, or handle checks that contain sensitive personal information.
- Resolve disputes easier: Online rent collection leaves a digital paper trail. So, it’s easier to resolve any conflicts about missed rent payments or partial rent payments. Free rent collection apps allow landlords and tenants to see their full payment history.
Are All Rent Collection Services the Same?
Choosing an online solution to accept rent payments can be tricky for some landlords. Not all rent collection services are created equal. But you may be surprised that many free apps for tenants to pay rent have many of the functions of paid apps.
At RentDrop, we feel you should never have to spend money on a rent collection app. After all, you already have plenty of expensive overheads running a property management business. So, why add to your monthly expenses by paying for paid plans, transaction fees, or other costs just to collect rent? The simple answer is—you shouldn’t.
Why Choose a Free Online Rent Payment App?
When comparing free rent collection apps with apps that have monthly plans, you'll see it's a no-brainer to avoid spending money on a payment service. Some rent payment apps seem to be free but have hidden fees, such as charging for transactions. Let’s take a look at reasons to choose an online rent payment service that you don’t need to pay for.
In this example, we’ll use RentDrop property management software as an example. After looking at the types of services RentDrop provides, we’re sure you’ll never want to pay for a rent collection app ever again.
1. Collect rent online for free
One of the advantages of any rental payment solution is to collect rent online effortlessly. Tenants can pay rent by credit card, debit card, or ACH direct deposit. This money arrives directly in your bank account, and you receive an instant notification about collected funds.
2. Collect security deposits, partial payments, or late fees
You can collect more than just monthly rent. Rent collection apps such as RentDrop allow landlords to receive security deposits. Also, you can save time and avoid tenant disputes by automatically charging late fees. Of course, the fact that collecting rent online minimizes late rent payments means that you only have to use this function rarely.
If you need to accept a partial payment for some reason, you can send customizable payment requests to the tenant.
3. Set up an automatic rent payment schedule
Landlords and tenants can set up automated rent payments. Let’s face, everyone—tenants and landlords—are leading busy lives. So, it’s no wonder that forgetting to mail the rent check is one of the most common reasons for paying rent late. The rent payment app transfers money on a set day each month directly into your checking account.
4. Property management tools
You don’t have to pay a fortune to get a rent collection app to manage rental units. Many free-to-use rental apps have property management tools such as in-app and email notifications, lease management, and handy rental unit overview dashboards. These tools help reduce the amount of paperwork you have to deal with and minimize mistakes—essential for any successful property manager or landlord.
5. Rent collection apps that are free
One of the most significant advantages of using a free app for rent collection is that you have no extra costs. You can then pass on the saving to your tenants. You could either lower monthly rent payments to help keep tenants happy. Or, you could use the savings to reward your best tenants for paying their rent on time.
Related reading: Top tricks to make sure that you never wait for late rent payments again.
The Hidden Costs of Property Management Apps
Many rent collection apps may seem that they are free to use. But, when you start using them, you discover that you have to pay for certain property management services. Or, it could be that tenants have to pay extra fees on top of their rent.
In the end, paying for rent collection apps means that you have to pass on extra costs to tenants—something landlords need to avoid doing in a competitive rental market.
Let’s briefly look at examples of the extra costs that some seemingly free rent collection apps charge.
- Free trial: Some expensive online rental payment systems entice you with a free trial. After the trial period is over, you have to pay a regular monthly fee and fees for each rental unit.
- Tenants pay transaction fees: A typical hidden fee in free-to-use rental apps is that the tenants pay for the transaction. Usually, ACH money transfers are free. But tenants may have to pay up to 3% for transaction fees. For tenants who are hard up and find it difficult to pay monthly rent, this fee may make it challenging to get tenants to pay rent online.
- Limited functionality: Some property management apps that are free to use only have a few basic features. For example, while allowing free online rent collection, you could be limited to managing a few rental units.
- Landlords use it for free but not tenants: A few rent collection apps charge tenants to use the online payment system, but not landlords. Sometimes, these apps usually have extra fees that landlords have to pay, such as tenant screening, rent estimates, and renters insurance.
Why You Should Never Spend Money on a Rent Collection App
Many of the best apps for online rent collection are fully functional apps that are completely free for landlords and tenants. Why not check out the RentDrop property management app to see how easy it is to collect rent without paying for anything.