How to Set Up Tenants to Pay Rent Online
If you are a landlord who does not reside at the property you are renting out, you will find it more convenient to allow tenants to pay rent online. This is a fairly simple setup; the important thing is that your tenants have computers and a reliable Internet connection.
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Instructions
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Sign up for a Paypal account, which is free, or a regular merchant account, which will require a deposit and monthly fees.
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Decide if you want to accept credit cards or e-checks, or a combination of both. Many landlords prefer to receive rent payments from a drafted checking account as opposed to a credit card payment, which could be disputed and charged back. Select your desired payment options on your merchant account application.
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Set up a small, one-page website with a web hosting service that offers a free shopping cart. This is the website that tenants will visit to make rent payments online. Once you have your credit card or e-check merchant details, you will enter your merchant account number into the shopping cart software to set up payment capabilities. (Paypal has a built in shopping cart system that is very easy to use--you do not need a merchant account number; only an email address and bank account.)
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Include information about your real estate company or contact details for renters (your mailing address, name, phone number, and email address) on the web page. Create a large, conspicuous link on the page that directs tenants to "Pay Rent Here." (This link will be provided by your shopping cart service or Paypal.)
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Direct each tenant to enter his name and unit number with the online payment. There is an optional comment text box that is displayed on most online shopping-cart systems where this information can be typed. Once the renter enters payment details--credit card or e-check information--and clicks "Submit," the rent payment will be sent to your merchant account processor and eventually to your bank account.
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Tips & Warnings
To each tenant, send a Paypal link that contains payment details as an alternative to setting up a website. The link will point to the page where your Paypal shopping cart is hosted online. Ask each tenant to send you the email address that will be used for each rent transaction so that you can know who has paid rent for the month. Send a newsletter to each tenant explaining the new payment procedure with the website address in large letters. If you have multiple tenants and the rent is different for each, set up the shopping-cart system so that renters can manually enter the amount of the payment. Consider setting up an automatic payment deduction with Paypal. Both tenant and landlord need a Paypal account (business or premier account for the landlord) for this to work. You may want a third party to handle your rent payments (see "Resources" for a website that allows you to manage your tenants online).
Resources
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Comments
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Please be careful when using Paypal to collect rents. Contrary to the impression this article leaves you with they actually have no ability to stop the tenant from reversing the charges. If paid by credit card they can dispute. If paid by bank draft they can just go into their local branch and make up whatever story they want to get the teller to reverse the transaction. If paid by Paypal account balance the kind folks at Paypal have no way to verify anything since this is a "service" transaction so they have no choice but to reverse. Know your tenant before accepting payment this way!
