When it comes to collecting rent for a short-term rental, there are many ways to automate the process. If you’re using Airbnb or VRBO, these services ask that you utilize their payment systems to collect rent in order to collect their fee and enable card payments. However, if you found a tenant directly or have a renter staying longer than a few days, there are much cheaper options to collect rent
Traditionally, collecting rent entailed asking for a check before the first of the month. Tenants would leave this check under your door or in your mailbox, then after you cash the check, funds arrive in your account 4-8 business days later.
In the past several years, many landlords and property managers have switched to direct bank transfers or third-party money transfer services to collect rent. While giving your bank account to others is ill advised, there are a number of digital transfer services that enable collecting rent. However, not all systems are purpose built for collecting rent. This is especially true for short-term rentals.
Below are a few options for collecting rent simply and efficiently. We recommend at least knowing your options, since there are pitfalls or benefits to using each type of service.
Collecting Rent via Checks
Collecting rent in the form of a bank check is an effective way to know a tenant is making steps to pay rent on time. However, with the highest transfer time, you can expect to receive funds in your account in 4-8 business days. Further, this window opens you up to the risk of the tenant cancelling the check or not leaving funds available in their account.
You can add a bounced check fee and get into a rhythm of depositing checks at the end of the month, but this is the most labor intensive and highest fraud risk option. However, this option is generally well-understood by the 30+ year old crowd and is free. Be advised that >25% of Gen Z is reportedly unaware of how to write a check.
Collecting Rent via P2P Transfer Services
Collecting rent through transfer services like Venmo, PayPal, CashApp, or Zelle is another common practice for landlords or property managers. These services generally provide a simple and well-understood method to send or request money that your renters likely already use.
However, these services are notorious for hiccups and restrictions that are designed to combat fraud. The most common issues reported for property managers collecting rent include low withdrawal limits, transfer or withdrawal holds, and post-payment reversals requested by the tenant. These systems were designed to split the cost of a dinner bill and not to support many thousands of dollars moving from one person to another, so use these services at your own risk.
While these services are generally “free,” they enable the sender to select between “friends and family” payments or “goods and services” purchases when sending a transfer. If the renter accidentally clicks “goods and services,” you will be out 2-3% of the transaction (NerdWallet). One mistake could cost you $40-60 on a $2,000 per month rent charge.
Finally, in order to pay your bank for a mortgage or move money where you need it, these services generally take 2-4 business days to transfer money to your bank. Remember that if your weekly withdrawal limit is $500, then it could take you 4 withdrawals to move these funds out of your account.
Zelle is probably your best bet in this group. They enable direct-to-bank transfers from your tenants, allow recurring transfers, and do not report transfers to the IRS. However, for short-term rentals it can be incredibly difficult to figure out who paid you and for which time slot of your rental.
Collecting Rent with a Rent Collection Payment Service
Collecting rent through a rent collection payment service, such as Yardi or Avail, are purpose-built services designed to simplify the rent collection process. These services organize rent collection by unit, offer direct to bank payments, and allow customers to set up autopay to lower risk of late payments.
These tools cost $5-20 per month, but the direct to bank transfer features are enabled for large transfers, without the worry of withdrawal limits later. Further, the organization and ability to request late payments or upfront deposits make them perfect for new tenants.
While the services are perfect for longer term leases, they are a hassle for new tenants or collecting from tenants on a non-monthly basis. If you are renting a unit for a few weeks or just a few months, these rent collection tools are a bit bulky to set up with your tenants and not designed to collect from tenants for partial months.
Collecting Rent with WellPaid
WellPaid’s simplicity of a P2P money transfer service is combined with the organization of a rent collection service. Further, WellPaid offers a few unique features that sets the service apart and makes it ideal to collect rent for short-term tenants.
Similar to rent collection payment services, WellPaid is a direct-to-bank transfer service that enables transfers from your tenants directly to your bank in 2-3 business days. Similar to the simplicity of the P2P transfer tools, you can send a request for whatever time period or to however many tenants you like. Simply type in their email or phone numbers to request payments from multiple people and give a quick description for the location or time period of your rental.
Further, WellPaid is the only service that allows you to directly charge tenants for the cost of utility bills or other charges. If you have a tenant staying for 3-4 months, then the hassle of transferring lienable utilities into their name is likely too much an issue to start. You can even see what restrictions there are for sharing services here.
However, you don’t want to be stuck with the costs of a tenant running the A/C all day or including the cost in a headline rent price when listing your rental. Take it from the airlines, by adding in utilities for an all-included price makes your rental look expensive in a 2-second glance from potential tenants.
WellPaid allows you to automatically charge the group of renters with utility bills when they are charged to your account. Therefore, you don’t need to manually request the charges from renters, and your renters know that this was the exact charge from the provider. Further, your renters can decide for themselves how they want to pay, split evenly or otherwise.
Anyways, as you look for options to collect rent from short-term renters, we hope you consider WellPaid. The service charges a competitive $3 per month in order to provide simple and secure bank transfers that give you the flexibility of collecting rent like a P2P transfer service with the organization of a rent collection tool. Learn more on our website here.
As an added bonus, WellPaid has partnered with EasyRef to simplify screening tenants with automated reference checks. Calling to check on references may work for long term rentals, but references can be easily faked and this may be too much of a hassle for short-term stays. EasyRef provides a simple survey and checks the identity of references to enable you to learn if the tenant will respect your property in seconds.