One of the most frustrating parts of being a landlord is tracking down rent. A tenant may forget, make a simple mistake, or refuse to pay. No matter the reason, trying to collect rent on time can quickly become stressful. To make rent collection easier, some landlords use payment services like PayPal.
While PayPal can be used to collect rent, there are several reasons landlords may want to choose another option.
PayPal’s Terms and Conditions state that certain real estate transactions are not allowed, and rent may fall into that category. A business account may help address this issue, but business accounts come with added fees. PayPal is also commonly used for personal payments, not large monthly rent payments. If PayPal notices unusual activity, it may flag your account or your tenant’s account. That could lead to a suspension or an added fee of 400 dollars for payments PayPal considers unlawful.
A business account can cost more, and PayPal may charge fees for business payments classified as “goods and services” transactions. These fees may range from 1.9 to 3 percent, not including the 49-cent commission fee. If you want PayPal to transfer money to your bank account right away, there may also be a one percent charge. In total, you could lose four to five percent of your rent payment when using a PayPal business account.
Another reason landlords may not want to use PayPal for rent is that handling late payments can still be difficult. If you want immediate access to your money, you may have to pay an extra fee. Otherwise, the funds may take around three days to reach your account. PayPal also does not let you block payments or directly enforce late fees.
If you later need to evict a tenant for late rent, you will need clear records showing when each payment was made. That can be harder to manage with PayPal. At Excalibur Homes, we make rent collection easier. We offer property management services in Atlanta that include leasing, marketing, rent collection, eviction, and more. With our help, you do not have to spend your time chasing rent or handling frustrating tenant payment issues.
Landlords need clear records showing who paid, which property and rental period each payment covered, any added fees, and the balance still owed for every tenant and rental property. Deposits, deductions, and refunds also need clear records.
PayPal provides basic transaction records, but it does not organize payments by tenant, property, or lease. Property management software provides detailed ledgers and reports that can make bookkeeping and tax preparation easier.
State or local laws may require security deposits to be kept separately, properly documented, and returned within a set period of time.
A general PayPal balance may not meet these requirements or clearly separate security deposits from rent and personal funds. Use a compliant deposit process, keep detailed records, and review local laws or speak with a qualified legal professional.
