One of the most frustrating aspects of being a landlord is having to hunt down rent. Whether it be a simple mistake, forgetfulness, or downright refusal to pay, scrambling to get paid on time from tenants is undoubtedly frustrating. To make the rent collection process easier, some landlords turn to banking services like PayPal. While there’s no harm in using banking applications to collect your rent, there are a few reasons why landlords shouldn’t use PayPal.
You Need a Business Account
If you read the Terms and Conditions of PayPal, it specifically states that real estate transactions are prohibited, and rent falls under that category. You can use a business account to get around this issue, but a business account requires extra fees. Plus, Paypal is an app for personal transactions, not large monthly fees. If PayPal notices odd activity, it may ding your account or your tenant’s account, resulting in a suspension or an additional fee of 400 dollars for unlawful payments.
There Are Additional Fees
Creating a business account costs extra, and PayPal charges extra for business fees, as they classify as “goods and services” transactions. This business fee may range anywhere from 1.9 to 3 percent, which doesn’t include their 49-cent commission fee. Also, if you want Paypal to instantly transfer your money into your bank account, there’s a one percent charge. Overall, you may end up losing four to five percent of your rent money if you use a PayPal business account.
Not Ideal for Late Payments
The main reason why landlords shouldn’t use PayPal to collect rent is because there’s still the issue of fiddling with late payments. Remember, if you want instant access to your funds, you have to pay extra. Otherwise, it’s going to take around three days for funds to appear in your account. You can’t block payments or enforce late fees on PayPal, either. If you want to evict a tenant for late payments later on, you’ll need to have a record of their late payments, which is difficult to do if you use PayPal.
Fortunately, at Excalibur Homes, we make collecting rent easy. We offer a wide array of property management services in Atlanta that range from leasing, marketing, rent collection, eviction, and more. With us, you never have to deal with hunting down rent or dealing with frustrating tenant issues again.