Rent payment tools for landlords and tenants have valuable features to pay rent money online. However, if you are using PayPal for online rent payments, you could be missing out on essential tools that prevent late and missed payments. PayPal also lacks payment controls for landlords, putting your cash flow at risk. Automated rent payment tools found on apps for landlords are one of the solutions to avoid late rent payments.
If you’re a landlord, the chances are that you deal with late or missed rent payments? Unfortunately, tenants who pay rent late disrupt your rental income. In some cases, late payments could cause you to miss mortgage payments or pay utility bills. Additionally, late payments can affect the landlord-tenant relationship when you charge late fees to tenants.
But it’s not just landlords that must deal with late rental payments. Tenants also must deal with them from time to time. For example, paying rent late could be due to unexpected bills, a late paycheck, or forgetfulness. So, any solution that helps tenants make rent payments on time every month dramatically improves the rental process.
This article explores essential rent payment tools for tenants and landlords. And if your tenants use PayPal to make monthly rent payments, you will learn why you should switch to a dedicated online rent payment service. You will also learn compelling reasons to look for PayPal alternatives for rent payments.
Essential Automated Online Rent Payment Tools
Automated tools to simplify the rent payment process are useful for tenants and landlords. For example, tenants benefit from recurring rent payments and automatic rent reporting to credit bureaus. Payment tools for landlords include rent reminders, automatic late fee calculation, and blocking partial rent payments automatically. These tools put landlords in control of rent payments.
Does PayPal Have Automated Rent Payment Tools?
PayPal lacks key rent collection tools that landlords and tenants need to facilitate smooth online rental payments. For example, tenants who use PayPal to pay rent can’t set up recurring billing options on the money transfer app. Additionally, PayPal lacks the function for tenants to report rent payments to credit bureaus.
PayPal has no viable solutions to automate the online rent collection process. If you are a landlord running a successful rental property business, the lack of tools makes PayPal a poor option for rent collection. This is because you would need to use third-party applications to send rent reminders and calculate late fees.
There is also another automated rent control tool that is missing on PayPal—blocking a partial payment. Landlords who collect rent money online must have the option to refuse a partial rent payment automatically. This feature is necessary when trying to evict a delinquent tenant for non-payment of rent or other lease violations.
But does PayPal not have a subscription option to offer recurring bill payments? That is true. But landlords can only use this by setting up the option on a website. Then they would have to direct tenants to the website to signup for recurring PayPal rent payments. The mobile PayPal app doesn’t allow tenants to set up recurring automatic payments.
Related reading: How recurring rent payments boost rental income.
Should Your Tenants Use PayPal to Pay Rent Online?
Successful landlords and property owners generally avoid digital wallets like PayPal, Venmo, and Zelle to collect rent payments. Although the money transfer apps make paying rent money online easy, they are lousy options for running a rental business. Here’s why.
Five reasons why tenants shouldn’t use PayPal for rent payments
Can tenants use PayPal to pay rent online? That is possible if you allow this option on the lease agreement. But should tenants use PayPal for online rental payments? Here are five compelling reasons to avoid PayPal at all costs.
1. PayPal charges fees for rent payments
Landlords must pay hefty fees to collect rent money using PayPal. So, how expensive are PayPal fees for landlords? You must pay $3.49 plus a $0.50 fee per transaction for each incoming PayPal payment. While this amount doesn’t seem much, the substantial transaction fee adds up to hundreds of dollars per year in PayPal fees.
If you run a business managing rental properties, it’s against PayPal’s Terms and Conditions to use the “Friends and Family” option to send rent money.
2. It’s impossible to decline a PayPal rent payment
Another reason to refuse rental payments from tenants is that you can’t block partial payments. Because it’s a peer-to-peer payment app, there is no way for a landlord to decline a partial rent payment on PayPal.
3. PayPal doesn’t report rent payments to credit bureaus
Rent reporting to credit bureaus is another rent payment tool missing on PayPal. Tenants have a strong incentive to pay rent on time, knowing that a late or missed payment can impact their credit score. Additionally, tenants love using rent payments to boost their credit history.
However, there is another reason to avoid PayPal for rent collection. Offering to repot rent to the major credit bureaus can make you more competitive. For example, when given the choice of two similar apartments to rent, but one offers rent reporting, tenants are more likely to choose the landlord who has signed up for a rent reporting service.
Therefore, you have fewer vacancies and attract more responsible tenants.
4. PayPal doesn’t split rent with roommates
Although PayPal is a “bill splitting app,” it lacks a function for co-tenants to split the rent. Rent splitting means that each tenant would pay their share of the rent directly to the landlord. Without this feature, PayPal makes it challenging to manage a multi-tenancy rental unit.
5. PayPal lacks automated features for landlords and tenants
PayPal doesn’t simplify the rental process because it lacks handy automated tools. Having options like recurring payments, rent reminders, late fee calculation, rent reporting, and partial payment blocking are valuable tools for tenants and landlords. However, you will never get these with PayPal.
Related reading: The truth about using PayPal for rent payments.
Rent Payment Apps — Automated Tools for Tenants
Dedicated rent payment apps have several helpful tools for tenants to make them make consistent rent payments every month. Let’s look in detail at these handy options.
Setup automatic rent payments
The best automated tool in a rental payment portal is automatic payments. All a tenant must do is enter the rent payment date and then forget about it. Then, the rent money is transferred to the landlord regularly every month. This feature helps the tenant avoid getting charged late fees for forgetting to make the payment.
There is another advantage. The best rent payment apps let tenants pay rent for free using a debit card or bank account balance. Many apps also facilitate paying rent by credit card. Therefore, if funds are lacking in one account, the rent collection platform can use a backup payment method.
Rent reporting to credit bureaus
The best rent payment apps allow tenants to use rental payments to build a positive credit history. For example, a report by TransUnion found that 73 percent of tenants would be more likely to make on-time rent payments if landlords provided the option to report payments to credit bureaus.
This tool is invaluable for running a successful and profitable rental business. For example, a tenant is more likely to choose a landlord based on the option of rent reporting. The TransUnion report found that 100 percent of tenants who had bad credit turned that around to a good credit rating within one year of rent payment reporting.
Rent Payment Apps — Automated Tools for Landlords
Dedicated rent payment apps have many helpful automated tools for landlords to make collecting rent online and on time easier. Let’s look in detail at these handy options.
Automatically block a partial rent payment
The best apps for landlords must have a tool to block a partial payment. This way, you as the landlord are in control of rent payments. This essential option for landlords protects your assets during an eviction process. The rent payment is automatically refused if it’s not for the entire rental amount.
Unfortunately, using PayPal does nothing to protect you during eviction proceedings.
Suppose you use PayPal to collect rent payments from tenants, and you have started eviction action against a tenant for a lease violation. In that case, the bad tenant could send a few dollars in rent money through PayPal, and there is nothing you can do. However, because you’ve accepted the partial payment, the eviction proceedings must start again.
Send rent payment reminders to tenants
A useful automation tool in the best rent payment apps is to send payment reminders to tenants. So, a few days before the rent due date, the online rent payment platform sends a friendly reminder. This is sometimes all that is required to reduce the number of late payments your tenants make.
Automatic late fee calculation
Choosing a free rent payment app that automatically calculates late fees is also great. However, tenants may occasionally miss the rent date even with automated rent payment tools in place. In this case, the payment app calculates the fees based on rent control laws, the grace period, and the number of days late.
The amount of late fees is then automatically charged to the following month’s rent. Because the app does all the work, you minimize the risk of making mistakes and help avoid future disputes with tenants.
How Rentdrop Helps Automate Rent Payments
Rentdrop is an online rent payment system with automated tools for rent collection. Unlike PayPal, Rentdrop puts landlords in control of rent payments and provides helpful tools for renters. This can help streamline the rental process, freeing up your valuable time and making it easier for tenants to make online payments for rent.
Here is a list of the valuable online rent collection features that Rentdrop includes for landlords and tenants:
- No subscription fees
- Accept rent money from tenants for free without any fees
- Several online rent payment options—tenants can pay rent by debit card, ACH bank transfer, or credit card payments
- Tenants don’t pay a transaction fee for debit card or direct deposit payments
- Tenants only pay a fee for credit card rent payments
- Rent splitting options for roommates
- Landlords can block a partial payment
- Tenants can set up recurring payments or make a one-time rent payment
- Automatic late fee calculation
- Send payment reminders to tenants every month
- Easy access to rent payment history
Compared to PayPal, Rentdrop is an excellent choice for landlords to run a successful rental property business. You get the convenience of PayPal for online payments. This means you never have to accept a rent check or payments in cash. However, Rentdrop gives you many automated tools to make it straightforward to collect rent online. And unlike PayPal, you never have to pay a cent to use the app for rent payments.
Rentdrop is free to sign up for, and there are no subscription fees for you or your tenants. So why not try Rentdrop today to see how its automated rent payment tools simplify the entire rental process.