Rent Collection Options for California Landlords

Collecting rent on time is a fundamental component of a successful rental property business.  All rental contracts should include a clause specifying how, when, and where monthly rent must be paid.  Here are the choices available to California landlords, and suggestions on which option may make the most sense for you.   

Collect in Person

There are some benefits to collecting rent in person at the rental.  You are paid on the spot and can check on the unit (superficially at least) on a regular basis.  In person collection also gives the landlord the chance to discuss any issues relating to maintenance, etc. with the tenant.  On the downside, this option can be time-consuming for landlords managing multiple rental units, where the tenant does not have a set schedule or is otherwise difficult to pin down, necessitating multiple trips to the unit to collect rent. 

Online Payment Processing Using Rent Collection Service

There are several online rent payment services landlords can use to collect rent, such as Apartments.com and Rental Manager.  These services typically have features designed to keep your payments organized and alert you to late or non-payers, so you know which tenants are current and which are not.  You can set up automated debits and email reminders with late fees included when the rent is past due. Your tenants will have the option to pay for free with their checking accounts or for a small fee with a debit or credit card.  This is one of the top options available to landlords. 

Automated Clearing House Debit

Setting up an ACH debit transfer between your bank and the tenant’s bank also offers the benefit of automatic monthly rent payments and an online record of the transaction. It is easy to set up, but there are fees and expenses associated with using the service.    

Online Payment Applications

Online payment apps such as Venmo and Zelle are growing in popularity for use in the property rental business.  The set up is easy and transfers are instantaneous.  For tenants, the pros of using this method are simple: paying rent on Venmo is fast and user-friendly, plus the app is already widely adopted. The downsides for landlords include high transaction fees that can add up quickly for both senders and recipients.  In addition, depending on the platform, many mobile payment services have transaction limits that restrict how much money tenants can send, or landlords can receive at one time. This may impact landlords in high-rent areas, or those who manage multiple rental properties. 

Drop box

Drop boxes are another option, typically utilized by owners of a multi-unit dwelling with common areas.  If you choose this option, be sure to install a security camera and properly secure the drop box in a well-lit common area of the premises.

First Class Mail

This method of payment has steadily decreased in popularity with the advent and growing number of online payment services discussed above.  This is the slowest method for collecting rent, and you aren’t guaranteed to get the rent on time.  Using first class mail also raises privacy concerns for landlords seeking to protect their home address from disclosure.  Although you can set up a post office box to eliminate that concern, doing so creates an added expense for the landlord.