The ability to schedule rent payments on a recurring basis is helpful for tenants and landlords. Scheduling regular expenditures helps tenants pay rent on time because they never forget to send rent money. And landlords who offer scheduled rent payments to tenants find they experience better cash flow and stable rental income.
Landlords who accept rental payments using Venmo or another digital wallet find that rent payment scheduling is missing from these apps. And even though peer-to-peer payment apps allow tenants to pay rent online, they miss vital features to simplify the rental process.
This article explores why landlords should have a payment system for tenants to schedule rent payments. You’ll also learn why savvy landlords avoid Venmo for rent payments and what landlord software is a suitable alternative.
Why Schedule Rent Payments
Scheduling a rental payment allows tenants to set up recurring payments using a rent collection app. First, the tenant enters the date when they want to send the rent money. Then every month, the rent payment is made on the same date in line with the tenant’s rent schedule.
Some tenants also like the option to schedule rent payments in installments throughout the month. This payment feature is handy for tenants who are self-employed or in the gig economy. Depending on their income schedule, they can pay rent money weekly or bi-weekly. But, of course, they must pay the entire rental amount by the due date.
The benefit to tenants of scheduling rent payments is that it simplifies the rental process. They no longer have to remember about mailing checks or authorizing an online payment.
Landlords also benefit when tenants schedule their rent payments. Fewer missed payments mean no more having to charge tenants late fees. It also stabilizes your rental income because you are sure of receiving rent payments from tenants monthly.
Related reading: How automatic payments can boost rental income.
How to Schedule Rent Payments by Check
But suppose your tenants still mail rent checks. Is it possible to schedule rent payments so that they don’t forget?
Surprisingly, many tenants and landlords still prefer paper-based methods for rent payments. A study published by Harvard Business School found that 42 percent of landlords still accept rent checks and 22 percent of tenants still pay rent with cash.
Options to schedule a rent payment are limited if you accept paper checks. One solution would be to collect post-dated checks from a tenant and then deposit them each month.
However, that still requires driving to the bank, depositing the check, and then waiting for the check to clear. And it doesn’t solve the problem of bounced checks or ACH payment returns if there aren’t sufficient funds in their bank account to cover the payment.
Using Venmo to Schedule Rental Payments
Venmo is a popular payment option for tenants to pay rent online. All tenants must do to pay rent is enter the landlord’s contact information, the rent amount, and then hit send. The rent money arrives almost instantly in the landlord’s Venmo account.
This means tenants can pay rent using a debit card, credit card, or ACH bank transfer.
Unfortunately, Venmo lacks a crucial feature for tenants—there is no option to schedule a regular rent payment. Although using Venmo as a rent payment method is better than cash rent payments or rent checks, it doesn’t have handy features found in landlord software.
The lack of payment scheduling in mobile payment services like Venmo, PayPal, and Zelle is just one reason successful landlords choose to avoid these.
Other Reasons to Avoid Venmo for Rent Payments
Venmo is a useful payment option to send money to friends and family or split bills. However, using Venmo for rent collection means missing out on what highly rated landlord software can offer. In addition, Venmo’s lack of functionality for rent payments could put your rental business at risk.
Here are some reasons you should consider alternatives to Venmo for rent payments.
Landlords can’t block a partial payment with Venmo
One of the most significant drawbacks of using Venmo to run a rental business is the inability to cancel a partial rent payment. This option is essential if you must evict a tenant for non-payment of rent or another lease violation. With Venmo, all a tenant has to do is make a partial payment, and the eviction process must start again.
Landlord software must give a landlord the option to block a partial rent payment.
Venmo doesn’t report rent payments to credit bureaus
Venmo doesn’t give tenants or landlords the option to report rent payments to credit bureaus. Think about it — rent is the largest recurring payment tenants must schedule each month. Responsible tenants cannot typically use these payments to build credit history. Therefore, Venmo doesn’t incentivize on-time rent payments, and they don’t affect a tenant’s credit report.
The best landlord software solutions report rent payments to credit bureaus.
Venmo lacks automatic late fee calculation
Venmo doesn’t have handy landlord tools that automatically calculate late fees. Landlords should have a late fee policy if a tenant is late with rent money. However, calculating late fees can be tricky, and it’s a time-consuming process. And there is the risk of making an error and causing unnecessary disputes with tenants.
Landlord software typically has late fee calculation as standard.
Venmo has no payment protection for landlords
Venmo is a peer-to-peer money transfer app for instant money transfers. However, there is no payment protection if a tenant pays the wrong person.
For example, suppose the tenant puts in the incorrect mobile phone number or doesn’t have the correct email address. In that case, the rent money can end up with the wrong person. The only way the tenant can get the rent payment returned is to contact the recipient and ask to transfer the money back.
Tenants can’t set up recurring payments
There is no option to schedule automatic rent payments if tenants use Venmo. While most tenants pay rent responsibly, it’s possible to forget. In this way, Venmo could severely impact your cash flow if several tenants are late paying rent.
Highly-rated landlord software should let tenants schedule recurring rent payments.
Landlords must pay fees to collect rent with Venmo
Although tenants can send rent money for free, landlords must pay transaction fees for rent collection. How much does it cost to collect rent with Venmo? According to Venmo, seller (landlord) transaction fees are 1.9%+$0.10 of the total payment.
Even though Venmo calls these business fees low, they can add up to thousands of dollars annually. For example, suppose you manage three rental units with an average rent of $1,600 per month. In that case, you would pay Venmo over $1,000 in fees every year.
Related reading: The best rent payment app features not found on Venmo.
Using Landlord Software to Schedule Rent Payments
Landlord software like Rentdrop is the best solution to manage rental payments. Like Venmo, online payment systems accept various payment methods—credit and debit card payments and the bank balance. However, the best software for rent payments includes various tools for landlords and tenants.
Here are some of the tools included in Rentdrop that can encourage on-time rent payments and help eliminate the hassle of rent payments.
Block a partial payment
Rentdrop has a handy function to block a partial rental payment. This option gives you control over rent payments rather than empowering tenants. Therefore, if you have started eviction proceedings, you can set the tenant’s profile to block any rent payment that is less than the total amount.
In this way, Rentdrop protects your assets in case of an eviction. And although evicting a tenant is a costly and lengthy process, you can ensure the eviction order is served in the fastest possible way.
Report rent payments to the major credit bureaus
Rentdrop will soon have the option of allowing tenants to report rent payments to credit reporting bureaus. This handy feature has benefits for you and your tenants. First, tenants can build their credit score with every on-time rent payment. Second, they have incentives to pay rent on time which, in turn, means fewer missed payments.
How can credit reporting positively impact rent collection? A TransUnion survey found that rent payment reporting can reduce late payments by up to 50 percent. Additionally, rent reporting can boost 60 percent of credit scores within one month.
Tenants can use autopay or one-time payments
Rentdrop allows tenants to schedule their rent payments with its recurring payment feature. Automatic rent payments are one of the best ways to eliminate late rent due to forgetfulness. Additionally, tenants can also use the option of making a one-time payment or using the autopay feature.
Use a rent collection app for free
Rentdrop is a fee-free rent payment solution that doesn’t charge a cent to landlords. So, unlike Venmo, which charges hundreds of dollars annually to collect rent, Rentdrop lets property managers and landlords collect rent money for free.
In case there are extra fees for credit card payments or credit reporting, you can charge these to the tenant.
Tenants can pay rent for free
Another reason to choose Rentdrop as a suitable Venmo alternative is that tenants don’t pay fees. This means that tenants can pay rent with a debit card or make a direct deposit without incurring transaction fees.
But what about tenants who want to pay rent with a credit card? In that case, the tenant (not the landlord) pays a small fee, which is standard industry practice.
Send rent reminders
One helpful feature of Rentdrop that Venmo lacks is to send rent payment reminders. Tenants lead busy lives, and it’s easy to forget to pay important bills. The simple solution is to send a rent reminder a few days before the rent due date. This way, you minimize the risk of a missed payment.
Split rent with roommates
Rentdrop allows tenants living in a multi-tenancy rental unit to split rent with roommates. This feature enables each tenant on the lease agreement to pay their part of the rent directly to you. This way, each tenant is personally accountable for their share of the rent.
Rentdrop — A Landlord Software Solution For Efficient Rent Payments
Rentdrop is packed with handy features to manage rent payments effectively.
Useful tools for tenants allow them to schedule rent, split rent, use various payment methods, and report rent to credit bureaus (coming soon).
In addition, landlords can take advantage of payment controls like blocking a partial payment, sending payment reminders, and automatic late fee calculation.
In addition, Rentdrop features fast rent payment processing times with funds being deposited in a few business days. Also, landlords can access rent receipts, get accurate reports, and see the status of individual tenant payments.
Rentdrop is free for tenants and landlords to sign up for. Additionally, there are no subscription fees, meaning there is no risk to start using Rentdrop today to manage your rent payments.