How to Make Extra Money with Payday Rent Payment Plans

Written on June 16, 2015 by

Payday Rent Payment PlansHave you considered offering multiple rent payment options for your residents?

It is a great way to increase your cash flow and help your tenants manage their finances.

Jeffrey Taylor, “Mr. Landlord,” has advocated for this idea for years. And since the:

  • US Bureau of Labor Statistics reports that private business with employees earning less than $20/ hour are typically paid weekly.
  • Time Magazine reports nearly half of all Americans live paycheck to paycheck

This idea makes a lot of sense.

Did you know 70% of construction workers are and 50% of all manufacture workers are paid weekly? Why not collect rent weekly and get in sync with them!

70% of construction workers are and 50% of all manufacture workers are paid weekly.

Yes, more frequent rent collections are more work for a landlord, but the service fees and additional rent makes the effort worthwhile.

What is a Payday Rent Plan?

A Payday Plan gives a renter the option to pay rent weekly or bimonthly in accordance with their payday schedule. A service fee is added onto the payment to compensate for additional handling and bookkeeping.

What Makes It Profitable?

A payday rent plan makes additional income in two ways:

  1. Additional Service Fees
    Your resident pays a $10 fee each time they make a payment. So if they pay weekly, you end up with $40 extra at the end of the month.
  2. Additional Rent Payments
    In the case of weekly payments, the monthly rent is divided by four and collected 52 times per year. Meaning four additional payments are made over the course of 12 months.

For example, if the monthly rent is $1,000 then the weekly payment would be $250 ($100 /4) plus a $10 handling fee. This totals $260 per week.

There are 52 weeks per year, so the total amount collected would be $13,520 (52 x $260). This is $1,520 more than a traditional monthly rent schedule.

In the nutshell, for the example of $1,000/month rent, you stand to collect 11.2% or 9.5% more rent if you collect weekly or bimonthly respectively.

Is This Plan Predatory?

When I tell people about this concept they immediately try to compare it to a Payday loan. However, this practice is not at all predatory.

Here are the facts:

  • Cheaper than a Payday Loan
    This plan charges a fixed $10 handling fee which is equivalent to 15 minutes of a bookkeeper’s time. This is 75% cheaper than a Payday loan which charge $45 for an advance (391.07% APR). There really is no comparison.
  • Helps Tenant Utilize Family and Friends
    Lower income renters are better able to borrow small amounts from friends and family than larger lump sums. Payday rental plans help renters access their network.
  • Avoids Cash Advances
    This plan helps renters avoid the temptation of using a quick money cash advance to come up with large rent payments.
  • Better Money Management
    Payday Rent plans help renters manage their money. The structure helps them budget. You catch their pay/cash before they spend it on other things.

Breaking Down the Payday Rent Payment Plan

Let’s drop this idea into a breakdown table.

Payday Rent Payments
What: Increase profits by monetizing tenants’ need to spread out rent payment.
Time Commitment:●●○○○
Why:On a yearly basis, you can collect up an extra month’s rent plus service fees by helping your tenants align expenses with their paychecks. Your tenants will appreciate having a payment option that syncs with their lives.
Increase Net Income By:
  • Collecting a $10 handling fee per transaction.

  • Collecting pro-rated rent payments for 52-weeks verses a typical 12-month total.
Basic Components:
  • Special lease addendum.

  • Convenient collection process.

  • A clear method of helping renters understand the additional cost associated with the payment plan.
The Extreme Version:All of your renters choose to pay on a weekly plan.
Possible New Income Streams: Finance charges from other items you refinance for resident and pay weekly (or bi-monthly).
Nontangible Benefits:
  • A structure to help residents with poor budgeting skills.

  • Tenants that avoid late fees.

  • More loyal residents that can’t find other landlords that offer the plan.

  • Lower vacancy rates.
Steps to Implement/Test:

  1. Send a letter to your residents announcing the plan.

  2. Have them sign the lease amendment and return it to you in a self-addressed-stamped-envelope.

  3. Start collecting more income.

The Downside

There are some drawbacks to a Payday Rent Plan:

  • The Lease Must be Modified
    You will need to update your lease materials to incorporate the various due dates within the terms of the lease – this HAS to be done to enforce the change to the lease.
  • Payment Regardless of Month Length
    You will need to clarify that even though the month has five weeks, an upfront rent payment is due every payday (every Friday).
  • Some Renters Will Not Understand
    You stand to be misunderstood by people who don’t understand this is an optional program where the pros may outweigh the cons.

Final Thoughts

You can make more money collecting rent at a frequency that matches your tenants’ payday schedule.

Empathize with your lower income residents. Give them the option to pay you when they get paid and reap the benefits.

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34 CommentsLeave a Comment

  • Joe Fairless

    This is fascinating – never heard of it. Very interesting to think about.

  • Kathy

    This works well for me. I only have one rental property and am lucky enough to have a very good tenant. She is a single mom and I’ve known her for 8 years before she became my tenant a little over a year ago (she’s the office manager at my dentists office). She asked me if she could pay rent on the 1st and 15th to make it easier for her. I really didn’t mind and since my bank is on her way home from work, she drops the deposits off herself. This causes me no extra bookkeeping other than marking in two separate deposits each month.

    • Al Williamson

      Kathy, I like what you’re doing. You’re working a win-win. However since you’re collecting 50% of the rent 24 times a year, you’re not doing exactly what I’m promoting.

      If you collected 50% of your rent every two-weeks, then you would be collecting 50% of the rent 26 times per year.

      The difference is an extra rent payment!

      • Kathy

        I know you’re right and if I’d known about your plan earlier I would have implemented it that way. But, she gets paid on the 1st and 15th and is an excellent tenant with longevity of 10 years at her previous address with great references. She had been asking me for two years if she could rent my condo if it became available even though she’d never actually seen it – just went by my word what it was like (it’s very nice). When I decided I’d had enough of my previous tenants I let her know and she rented it sight unseen. Luckily it worked out that her current lease was up for renewal so she was available to rent from me. She’s a great tenant and takes very good care of my place, unlike my previous tenants.

      • Susan reichenbach

        Hi Al! I am about to rent part of my house as a first time landlord. I am looking for a rental agreement designed for long term but with weekly payments by renter,,,my main reasoning for doing this is that I understood to have it written that (for example). rent is due each Friday, then it would be late On Saturday with. $10 late fee. On Sunday an additional $10 late fee. If not paid by Monday, eviction process would start. And it seems someone told me they would legally have to be out in one week if no rent was paid by then……. I am looking to protect myself from having a tennent not pay and still live here. Does this make sense? Do you know of such a lease? Thank you, Susan

  • Don

    I am surprised that this has not been applied to the landlord/tenant already. It only stands to reason that you have a better chance of collecting rent when you provide more options to pay.

  • Novella

    I was approached by two of my tenants to pay weekly instead of monthly. It was time consuming as I had to physically recover the payments weekly. Unfortunately, Cozy does not allow for weekly payments so I set it up using PayPal. The additional money is a nice benefit. Make sure to read the laws for this type of lease agreement when it comes to landlord/tenant relationship.

    • Lucas Hall

      Hi Novella,

      Cozy will be launching some new and improved landlord payment options this summer/fall.

      Included will be the ability to charge the tenant in whatever intervals you wish, on any date you want.

      It’ll be a nice improvement to help landlords collect rent weekly, bi-weekly, or whenever.

  • Edward Pope

    Love the idea, but how can it be implemented in COZY? It appears that currently Cozy only allows payment at the beginning of the month.

    • Novella

      I emailed them in January of this year and they stated it was not an option and may be an option in the future. I just setup a PayPal button on my website to collect the weekly payments.

      • Don

        I have paypal, but do not have a website at this time. Did you build a site just to manage your property? How exactly are you using your site to collect payments via paypal? I will be renting July 1 and would like to have this option available to them.

        • Al Williamson

          I don’t speak for Cozy but I know they have their ears on!

        • Lucas Hall

          Hi friends,

          First off, this article is awesome Al! Way to go man!

          Cozy will be launching some new and improved landlord rent collection options this summer/fall. ACH (bank to bank) transfers will always be free, but we’ll also be adding the ability for the tenant to pay with a credit card for a small fee (paid by the tenant)

          Also included will be the ability to charge the tenant in whatever intervals you wish, on any date you want – which will allow you to use to Cozy for a payday payment plans.

          It’ll be a nice improvement to help landlords collect rent weekly, bi-weekly, or whenever. It’s definitely a highly requested feature.

        • Novella

          I use my website for viewing of available properties for rent. I advertise the website on other websites to generate traffic also. I just added another tab and labeled it ‘Pay’. Since you already have a PayPal account you can create a button with drop downs for up to 10 payment values. PayPal gives you the code to paste to your site. You can modify the values instantly if changes are needed. The monies are credited to your PayPal account immediately.

  • Donald F. Kehn

    I started collecting the rent weekly in Michigan in 1975. The main advantage for me was potentially (52) 25 dollar late charges ($1300 per/year) for those who are chronically late or whose account is never current.

    In addition there is less chance for tenants to spend the rent money if it is due the day after payday.

    Rent is due in the bank by the close of business on Sat. otherwise a 7 day notice is mailed out on Sun.

    No more rent checks lost in the mail. No more coming to my house at odd hours to pay the rent.

    Incoming payments are credited first to unpaid water bills, then to unpaid balances, then to current rent due.

    I use a rental agreement, the term of tenancy starts on Sunday 12:01am, and ends on Sat 12:00 midnight.

    Collecting rent by the week allows me to give 7 days notice instead of 30 days notice to Terminate a Tenancy (Complaint to recovery property)

    In Michigan, “Notice to Terminate” needs to be the same as the time between scheduled payments.

    Donald K.

    • Novella

      That is great info Donald. Thanks for sharing.

    • Lucas Hall

      I love that I’m not the only one who credits payments to unpaid balances before rent. When I try to explain it to some people, they look at me like I’m crazy. I just say “it’s a lot easier to evict someone for unpaid rent than it is for an unpaid late fee”.

      Thanks Donald!

  • Denise

    Is it legal to charge the management fee in every state? I have used this process temporarily with tenants who have difficulty making monthly payments but did not know I could charge for it. I have property in California & Oregon.

    • Robert Tully

      What management fee?

      This tip suggest that you only charge a higher rent price for the convenience of payment in shorter intervals. Just like a monthly rate is usually more expensive than a yearly rate by month, a weekly rate is more expensive than monthly rate by week.

      There’s no “fee”, because it’s all rent money – just more of it.

  • Kiara

    How would you word this payment arrangement in your lease?! I would also like to set up a web page for my tenants or future tenants to view up coming properties that, make payments etc

  • Donald F. Kehn


    1. The term of this tenancy is week to week.

    2. As a week to week tenancy, the week begins on Sunday and ends on Saturday.

    3. Rent is $215.00 per week or any fraction of a week and is due in advance on Saturday.

    4. Rent is due by close of the bank on Saturdays, and is to be paid, by depositing cash only, to account #xxxxxxx at PNC Bank, , (save your receipts, no personal checks.) Any week where the rent is short, or late, will incur a late charge. Payments that are late, payments that are less than the full amount due, and payments that are short as per paragraph 6 will incur a late charge of $25.00.
    Please initial __________, ______________


  • Linda Frazer

    Hi Al,

    I’d like to introduce this concept to a couple of my tenants. However, I’m not sure how to word the special lease addendum to include this.

    Also how do you commence the first payment? For example, if I was to introduce this on August 1 2015 (which is a Saturday) and they are paid on Friday August 7, do I get them to start paying me on Friday July 31 using this method or two weeks worth of rent on August 7 as they will be in arrears for August rent if they wait to pay me on August 7.

    Thank you for your help with this.



    • Al W

      You want to keep them paying in advance. That’s the most important thing.

      Work out a prorated rent for Aug 1 – 6 (or don’t sweat it because you will make up that difference and much more over time).

      • Linda Frazer

        Hi Al,
        Thanks for the quick reply. I appreciate it!
        What about the addendum to the lease. How would you word that?

        • Al W


          You’ve backed me into a corner.

          The step-by-step info is part of my Ancillary Income Course and available to my students. And since I don’t want to turn this into a commercial, feel free to contact me
          over at the LeadingLandlord blog.

          • Linda Frazer

            Ok sounds good to me.
            FYI. I bought your book on kindle “40 ways to increase the net income of your rental property”. I found it very interesting! Gave me some good ideas.
            Thanks again.

          • Lucas Hall


            I’ve read Al’s book already – I highly recommend it. I thought I was making dough with my zipcar rental, but he taught me some other methods of revenue that I would have never thought of on my own.

  • Kimberly

    Where can I get a lease addendum that covers payday payments?

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