We have found the shift in the demand for methods of rental payments changing within the last few years. There was a time where tenants would prefer cash payments for rent over writing cheques, especially as many tenants did not know how to write a cheque.
With technology continuously changing and expanding, there are now several forms of rent collection available to tenants. This is making cash payments dated and less desirable for the new generation of renters.
There are advantages and disadvantages to each method of payment.
1. Cash
Pros: Depending on the amount of monthly rent, tenants can easily withdraw cash directly from any banking institution or ATM machine nearby.
Cons: It is important to obtain a written receipt for the cash payment. This means that the landlord and tenant must meet in person to count the cash and write receipt which can cause problems due to scheduling and accessibility.
It seems that cash is becoming more and more of a hassle for both the landlord and the tenant in today’s rental market.
2. Post-dated/Personal Cheque
Pros: This can be argued to be the most convenient method of payment for the tenant. Tenants can write several cheques in advance for the duration of their tenancy and not worry about making arrangements for payment each month. Both the tenant and the landlord can keep records of these cheques to ensure a proper trail is documented for the rent collection.
Cons: There are a few issues with this method that are important to consider. Some tenants may not have cheques, and are unwilling to pay to obtain cheques from their bank. Others may not know how to write a cheque. The biggest disadvantage for landlords accepting personal cheques is the potential for bounced cheques and the necessary bank visits to deposit each month.
Today, we are finding about 50% of our tenants are paying rent with post-dated cheques.
3. E-Transfers/Electronic Deposit
Pros: This method is extremely quick and convenient for those tenants who are tech-savvy. E-transfers and electronic deposits can be done through any online banking service and takes a matter of minutes. Tenants can ensure the rent is paid on time with this method regardless of their location. Often times landlords will live out of town or tenants will be away on vacation, this is very convenient in these circumstances especially.
Cons: The only real disadvantage to the tenant is that he/she may experience bank fees associated with e-transfers or electronic deposits. Although these costs are minimal, some tenants may not want this extra expense. A disadvantage for the landlord is the need to provide the tenant with a bank account number, where many owners may not want to disclose this personal information.
We are finding more tenants requesting this type of rent payment each month. If you as a landlord do not offer this payment method yet, we would highly recommend looking in to this option.
4. Visa/Mastercard
Pros: This method can be convenient for both parties as the individuals do not need to meet in person necessarily. Most tenants will have a credit card if they are over the age of 18 or a parent will have a credit card to make the rent payments.
Cons: There are several cons to consider. There can be processing fees that are applied when paying via credit card. This could be a charge to the landlord or the tenant, depending on the credit card company. In addition to this, tenants may dispute the charges and file for chargebacks from the landlord. This can also be a dangerous form of payment for the tenant as they may not have the funds immediately in their account and could find themselves getting into debt quickly.
This is not a method of payment that we prefer and would recommend landlords to avoid this method when possible.
5. Pay Pal
Pros: This can be a good option for both tenants and landlords. Many people are familiar with Pay Pal and already have an account created. If both parties have accounts, tenants can easily transfer rent payments using the landlord’s email address or arrange for automatic payments.
Cons: The major downfall of paying by Pay Pal is the associated account fees and transaction fees. If both parties do not have Pay Pal accounts and are unwilling to create an account, this will be impossible.
This could be a great option if both the landlord and the tenant have accounts and are willing to continue with these accounts.
As we have mentioned, there are pros and cons associated with each form of rent collection. Landlords should decide which methods have positives that outweigh the negatives before deciding on which options to provide to tenants. Obviously the more options you offer, the more likely a tenant will pay rent quickly and efficiently.
With St. Patrick’s Day arriving tomorrow, University of Guelph students and residents should note that the City of Guelph Police and Bylaw Officers will have a heavy presence on March 17th. The City is not discouraging celebrating for the occasion, but is reminding everyone to party responsibly and be respectful of the community in which we all live.
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